NEW YORK (Dow Jones)--The Securities and Exchange Commission will suspend its "uptick" rule as part of a one-year pilot program to study the execution of short sales on the stock exchanges.

The program, which kicks off Monday, will allow short sellers to execute trades regardless of whether the stock is rising or falling. Under current rules, a short seller must wait for an uptick, or for a stock trade to be executed at a price higher than the preceding trade.

The SEC is undertaking a review of the way it regulates short sales as part of its new regulatory framework, Regulation SHO, adopted in June 2004. The suspension of the uptick rule is aimed at allowing the agency to obtain data to help assess whether it should be removed in part or in whole.

Short selling involves borrowing stock in hopes that the shares will fall and can be returned at a lower price, with the investor pocketing the difference.

The pilot program is seen by the SEC as being in the public interest because the uptick rule may actually harm market quality by inhibiting free movement of prices. The rule is about 70 years old and there is some sentiment it may have outlived its purpose, the SEC said.

The pilot stocks will consist of 50% of the New York Stock Exchange's shares, 47.8% of Nasdaq stocks and 2.2% of Amex listed securities. Stocks that will be in the pilot program include Intel (INTC), Wal-Mart Stores, Walt Disney (DIS), eBay (EBAY), Sprint (FON), Home Depot (HD) and Wyeth (WYE).

The suspension will not encompass exchange-traded funds, which are baskets of stocks that try to emulate the performance of market indexes. . -By Karen Talley, Dow Jones Newswires, 201-938-5106